By Anna Seeley on Unsplash
Invest in financial institutions in Cambodia offering innovative financing solutions for SMEs, particularly for those in the agriculture sector. Many players have emerged in this segment to provide financial services (including, loans, deposits, money transfers, micro-insurance, payment services, payroll services, and international remittance services) to low-income populations with an ambition to improve their livelihood options and to SMEs in the agriculture sector. Such players have been successful in attracting private investor interest, raising funds in the range of USD 3-25 mn.
Investments in the financial services sector in Cambodia require a cautious evaluation of the service providers that have been subject to criticism regarding excessive costs to customer, aggressive loan recovery practices and human rights violations. To combat such malpractices, relevant authorities have taken steps such as setting an annualized interest rate ceiling at 18 per cent and more recently a code of conduct for financial service providers. (24) (25) (28)
Following are some examples of companies that are active in this space as an illustration of the commercial viability of the investment opportunity: AMK Microfinance Institution Plc (AMK), formerly Angkor Mikroheranhvatho (Kampuchea) Co. Ltd., was founded in 2001 to provide microfinance services (including, loans, deposits, money transfers, micro-insurance, payment services, payroll services, and international remittance services) to low-income population to improve their livelihood options and to MSMEs in agriculture sector.
Chamroeun Microfinance Plc. (Chamroeun), formerly known as Chamroeun Microfinance Limited was founded in 2006. It is an MFI providing several types of loan products, including working capital for businesses, group loans and loans for social emergencies. It aims to serve Aquaculture farmers and is working with agri-cooperatives, providing not only finance, but also support in ensuring investment readiness of such enterprises.
Disclaimer: UNDP, the SDG Investment Platform, nor its affiliates (collectively “UNDP”) does not seek or solicit investment for programs, projects, or opportunities described on this site (collectively (“Programs”) or any other Programs, and nothing on this page should constitute a solicitation for investment. The descriptions on this page is provided for information value only, as examples of prior investment related work UNDP has conducted. UNDP assumes no liability for investment losses direct and indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains direct or indirectly resulting from trading profits, investment management or advisory fees obtained by following investment recommendations made, implied, or inferred by its research. Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the Website are not an offer to sell or a solicitation of an offer to buy any investment, security or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.
Provision of affordable loans for SMEs using customer centric systems and processes that promote enterprise growth, financial inclusion of last mile businesses.
- (1) UNCDF. (2017). Cambodia Financial Inclusion Country Report 2017. https://finmark.org.za/system/documents/files/000/000/223/original/Cambodia_Synthesis-Note_28-September-2017.pdf?1601985666#:~:text=Cambodia%20has%20a%20moderate%20level,financial%20services%20through%20formal%20providers (2) UNCDF. (2020). Measuring Progress 2020: Financial Inclusion in selected ASEAN Countries. https://www.uncdf.org/article/7615/measuring-progress-2021-financial-inclusion-in-asean (3) Badzmierowski, B. (2022). Investing for a Purpose in Cambodia: Sevea and Boost Capital. https://cambodiainvestmentreview.com/2022/03/15/investing-for-a-purpose-in-cambodia-sevea-and-boost-capital/ (4) BD Trust. (2019). Financial Access for MSMEs. https://www.unescap.org/sites/default/files/Session%205%20Financial%20Access%20for%20MSMEs.pdf (5) Kwanchainond, K. (2010). Small and Medium Enterprises Development Policies in Cambodia. https://www.asean.org/wp-content/uploads/images/archive/documents/SME%20Development%20Policies%20in%204%20ASEAN%20Countries%20-%20Cambodia.pdf (6) Sok, S. (2022). 70 Percent of Cambodians Have Access to Financial Services. Khmer Times. https://www.khmertimeskh.com/501052053/70-percent-of-cambodians-have-access-to-financial-services/#:~:text=About%2070%20percent%20of%20Cambodians,Bank%20of%20Cambodia%20(NBC) (7) Seng, S. (2020). How Small Businesses Have Coped with the Impact of COVID-19. http://www.cweacambodia.org/en/news-update/227/how-small-businesses-have-coped-with-the-impact-of-covid-19 (8) Badzmierowski, B. (2022). Investing for a Purpose in Cambodia: Sevea and Boost Capital. https://cambodiainvestmentreview.com/2022/03/15/investing-for-a-purpose-in-cambodia-sevea-and-boost-capital/ (9) International Finance Corporation (2019). IFC Helps PPCBank Expand Lending to Smaller Businesses in Cambodia. https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=18479 (10) IMF e-library (2021). Impact of interest rate cap on Financial Inclusion in Cambodiahttps://www.elibrary.imf.org/view/journals/001/2021/107/article-A001-en.xml#:~:text=In%20March%202017%2C%20the%20National,efficiency%20of%20the%20microfinance%20sector.
- (10) European Microfinance Platform. (2018). The Shanghai Commercial and Savings Bank Acquires an 80.01% Stake in AMK Microfinance Institution PLC. https://www.e-mfp.eu/news-and-events/press-release-shanghai-commercial-and-savings-bank-acquires-8001-stake-amk (11) Market Screener. (2020). Chamroeun Microfinance Plc. Announced That It Expects to Receive $3 Million in Funding from Renet Japan Group, Inc. https://www.marketscreener.com/quote/stock/RENETJAPANGROUP-INC-34078259/news/Chamroeun-Microfinance-Plc-announced-that-it-expects-to-receive-3-million-in-funding-from-RenetJap-33902989/ (12) SME Bank of Cambodia. (2022). The Total Budget of SME Co-Financing Scheme II Increased to USD 240 Million. https://smebankcambodia.com.kh/2022/02/25/scfsii/ (13) Sin, P. (2019). Ministry: SMEs Vital to Economy, but 95% not Registered. https://www.phnompenhpost.com/business/ministry-smes-vital-economy-95-not-registered (14) Thy, S. (2021). Roles of SMEs in Cambodian Economic Development and Their Challenges. https://www.nbc.org.kh/download_files/macro_conference/english/Roles_of_SMEs_in_Cambodian_Economic_Development_and_Their_Challenges.pdf (15) Sangeetha, A. (2021). Is Cambodia's Microfinance Sector Running its Course? https://www.phnompenhpost.com/special-reports/cambodias-microfinance-sector-running-its-course (16) AMK. (2020). Annual Report 2020. https://3fmtmcjjnee1j4gmyad1m918-wpengine.netdna-ssl.com/wp-content/uploads/2021/12/AMK-MFI-AR-2020-EN-Final.pdf (17) Chamroeun Microfinance Plc. (2018). Annual Report 2018. https://www.chamroeun.com/media/admin/js/uploads/images/Annual_Report%202018_Final_1-small.pdf (18) Royal Government of Cambodia. (2018). Cambodian. Sustainable Development Goals (CSDGs) Framework (2016-2030). https://data.opendevelopmentmekong.net/dataset/3aacd312-3b1e-429c-ac1e-33b90949607d/resource/d340c835-e705-40a4-8fb3-66f957670072/download/csdg_framework_2016-2030_english_last_final-1.pdf (19) MOP 2021 (20) Royal Government of Cambodia. (2015). Cambodia Industrial Development Policy 2015-2025. https://cdc.gov.kh/wp-content/uploads/2022/04/IDP-English.pdf (21) Royal Government of Cambodia. (2015). Cambodia Industrial Development Policy 2015-2025. https://www.eurocham-cambodia.org/uploads/97dae-idp_19may15_com_official.pdf (22) Royal Government of Cambodia. (2005). Law on Negotiable Instruments and Payment Transactions. http://www.cambodiainvestment.gov.kh/wp-content/uploads/2011/09/Law-on-Negotiable-Instruments-and-Payment-Transaction_051024.pdf (23) Royal Government of Cambodia. (2008). Prakas on Governance in Bank and Financial Institutions.https://www.nbc.org.kh/download_files/legislation/prakas_eng/2160B7-08-211.pdf (24) IMF e-library (2021). Impact of interest rate cap on Financial Inclusion in Cambodia; https://www.elibrary.imf.org/view/journals/001/2021/107/article-A001-en.xml#:~:text=In%20March%202017%2C%20the%20National,efficiency%20of%20the%20microfinance%20sector (25) Bloomberg (2022). Big money backs tiny loans that lead to debt, despair and even suicide; https://www.bloomberg.com/graphics/2022-microfinance-banks-profit-off-developing-world/?leadSource=uverify%20wall (26) LICADHO (2022). German government funded study confirms grave problems in Cambodia's microfinance sector; https://www.licadho-cambodia.org/pressrelease.php?perm=500 (27) Asia Foundation (2021). COVID in Cambodia- vulnerable households and debt; https://asiafoundation.org/2021/08/04/covid-in-cambodia-vulnerable-households-and-debt/ (28) Association of Bankers in Cambodia and Cambodia Microfinance Association (2022); Guide for the implementation of lending guidelines and code of conduct March 2022. (29) Laurie Parsons, Milford Bateman, Nithya Natarajan (2022): Microfinance, over-indebtedness and climate adaptation: new evidence from Cambodia; https://www.researchgate.net/publication/363680678_Microfinance_over-indebtedness_and_climate_adaptation_New_evidence_from_rural_Cambodia_Research_findings_report_Part_2